Relocation Policy & Practice

Corporate professionals continue to find themselves bearing responsibility for more diverse relocation programs. Similar to the previous few years, the vast majority manage formal policies for domestic (82%) and international relocations (86%), along with policies for permanent international transfers (71%), short-term/temporary assignments (67%), and international localization (63%). More than half maintain international intra-regional (56%) and extended business travel policies (54%) as well, and 43% have a policy for long-distance commuter arrangements.

Mid-size and large firms continue to be more likely to maintain formal domestic and international policies overall. In the recent past, they have also been more likely to have policies for specialized arrangements outside general domestic and international policies. However, this year differences emerge. Firms across size that relocate internationally are similarly likely to have policies for permanent transfers, localization, and intra-regional assignments. Domestically, large firms are far more likely than small or mid-size firms to use a policy for short-term/temporary assignments (79% vs. 60% & 64%). Mid-size firms are most likely to have policies for extended business travel (61% vs. 52% of small firms and 48% of large firms). Small and mid-size firms are more likely than large firms to have long-distance commuter policies (45% and 48% vs. 35%).

Besides an increasing variety of policies, most firms continue to define levels, or tiers, within policies. The larger the firm, the more likely its overall domestic relocation policy includes multiple levels. Firms using tiers manage two or more such policies on average across company size. These are based on a variety of factors; however, the top two, domestically, are job/grade level and position/job title. Internationally, assignment length is nearly equal in consideration to these two factors. Job/grade level, position/job title, and assignment length carry more weight in determining policy tiers at small and mid-size firms. However, job/grade level trumps all other factors at large firms by a big margin.

Question 18-1

Companies with a formal relocation policy: for domestic relocations

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Question 18-2

Companies with a formal relocation policy: for short-term/ temporary assignments

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Question 18-3

Companies with a formal relocation policy: extended business travel

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Question 18-4

Companies with a formal relocation policy: long-distance commuter

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Question 18a-1-1

Does your company have different tiers within its domestic relocation policy...

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Question 18a-1-2

Average number of tiers (levels) within domestic relocation policy

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Question 18a-2-1

Does your company have different tiers within its temporary assignments relocation policy...

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Question 18a-2-2

Average number of tiers (levels) within temporary assignments relocation policy

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Question 18a-3-1

Does your company have different tiers within its extended business travel policy...

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Question 18a-3-2

Average number of tiers (levels) within temporary extended business travel policy

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Question 18a-4-1

Does your company have different tiers within its long-distance commuter policy...

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Question 18a-4-2

Average number of tiers (levels) within long-distance commuter policy

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Question 18b-1

What are your different tiers based on...

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Question 18b-2

What are your different tiers based on...

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Question 44f-1

Companies with a formal policy for: International relocations

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Question 44f-2

Companies with a formal policy for: Permanent transfers

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Question 44f-3

Companies with a formal policy for: localization

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Question 44f-4

Companies with a formal policy for: intra-regional assignments

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Question 44g-1-1

Does your company have different tiers within its international relo policy?

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Question 44g-1-2

Average number of tiers within international relo policy

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Question 44g-2-1

Does your company have different tiers within its permanent transfers policy

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Question 44g-2-2

Does your company have different tiers within its permanent transfers policy

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Question 44g-3-1

Does your company have different tiers within its localization policy

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Question 44g-3-2

Does your company have different tiers within its localization policy

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Question 44g-4-1

Does your company have different tiers within its intra-regional assignments policy

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Question 44g-4-2

Does your company have different tiers within its intra-regional assignments policy

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Question 44h-1

What are your different tiers based on?

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Question 44h-2

What are your different tiers based on?

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Candidate Assessments

Candidate assessments have come into widespread use over the last few years to support successful relocations. For the last three years, roughly three-fourths of firms assessed candidates prior to relocation, a vast increase over the roughly half of firms that performed some level of vetting from 2012 to 2014. Overall, the most popular method continues to be assessments for all relocations (40%), down slightly but similar to 2015-2016 (46%+) and remaining roughly double the 21% levels from 2012 to 2014. However, there is a marked decrease among large firms performing assessments universally compared to the previous two years (29% vs. 42% & 44%), with far more large firms performing them “as needed/requested” this year compared to small or mid-size firms (22% vs. 12% and 9%). The number of large firms performing assessments overall is also down slightly (68% vs. 73%+) compared to the past two years, while the percentages of small and mid-size firms remain fairly similar to the past two years.

Fixed Benefits/Flex Benefits Menu-Driven Policy

Over the last three years, relocation volumes increased despite unique pressures from many sources. The incorporation of fixed/flex elements into policy is now nearly universal. From 2015 to 2017, nearly 9 out of 10 firms used aspects of fixed/flex policy, a marked increase from around two-thirds of firms doing so in 2013 and 2014. Additionally, over the last three years, the use of fixed/flex policy has become established at similar levels across company size; previously, such tailoring of benefits was much more likely at mid-size and large firms than at small ones. Coverage for core components remains the most popular aspect across firms of all sizes (either across all employee levels/categories or depending on employee level/category). One shift this year from the previous two: fewer mid-size and large firms offer flexible use of the full relocation benefit or a portion of it (either to all employee levels/categories or dependent on these factors). This is a return to near 2013 and 2014 levels, while the percentage of small firms offering the flexible use of full benefit amounts remains essentially double compared to that reported in 2013 and 2014.

Since the coverage of core components is the most popular aspect of fixed/flex policy, for the second year we dug deeper into which costs fell into this category. Overall, the top expense types are travel expenses-final move (58%), household goods shipping (55%), and temporary housing (53%). Across cost types, large firms are far more likely than mid-size or small firms to consider a cost as a core benefit, with roughly half or more doing so across components. Travel expenses for the final move is the only element considered a core benefit by more than half of small and mid-size firms. Additionally, far more mid-size than small firms consider some form of real estate assistance a core benefit (origin: 40% vs. 28%; destination: 36% vs. 18%), compared to 51% of large firms.

Incentives

To encourage relocations, the vast majority of firms across company size continue to offer additional, non-standard incentives or policy exceptions at or near historical highs, similar to 2014 to 2015. With increased employee reluctance rising to recessionary levels in 2014 and staying elevated over the last two years, policy tools to support greater acceptance remain key. The waning impact of housing/mortgage pressures is evident in that far fewer firms offered extended temporary housing benefits in 2014-2016 than did in 2013 (57%-61% vs. 72%). However, it remains one of the top three incentives over the last three years. Relocation bonuses and cost-of-living adjustments (COLAs) continue to round out the top three offerings across company size.

While around half of firms across size offered COLAs and nearly two-thirds offered extended temporary housing benefits, relocation bonuses were more often used by small (56%) and mid-size (60%) firms than by large (42%) firms as incentives for relocation. Large firms were more likely than small or mid-size firms to offer loss-on-sale protection (34% vs. 10% and 12%), guaranteed buyout options (32% vs. 14% and 20%), or buyer value options for origin homes (30% vs. 13% and 20%), similar to 2014 and 2015.

Mid-size and small firms flexed other creative options to a greater degree than large firms last year – both were far more likely to offer a guarantee of employment contract (31% and 29% vs. 19%) if a relocation was accepted. 25% of mid-size firms offered mortgage payoffs/loans (compared to just 8% of small and 12% of large firms) if the property sale wouldn’t cover the employee’s mortgage debt.

Incentives continue to be highly successful: nine out of ten firms say incentives worked almost always or frequently, similar to historical levels.

Frequency of incentives proving successful in convincing an employee to relocate

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Cost Containment

Even though most firms report continued optimism and improved financial performance over the last few years, cost containment is at historical highs across firms of all sizes. Economic conditions remain a significant factor on relocation volumes, causing keen sensitivity to the bottom line. So, it is not surprising that cost containment runs high for a third straight year after declining in 2012 and 2013. Creative solutions adopted during the Great Recession for controlling costs now seem to be mainstream across company size to optimize financial resources for relocation.

The use of cost-containment methods at large firms is similar to levels recorded during the recession and the first three years of recovery (87% vs. 78%-84%). Markedly more small firms used such methods last year (80%) in comparison to 2014-2015 (70%-71%), which represented a large jump from previous usage levels. Implementation by mid-size firms rebounded significantly (86% vs. 74% in 2015), similar to 2014 (84%) and well above historical levels. Generally, use of lump sum payments and capping relocation benefit amounts were the most popular methods across company size.

However, large firms were also just as likely to review/renegotiate supplier contracts. Most other methods remained more popular than they were in 2013, even if dipping below 2014 levels. The survey’s modification to include lump-sum payments as a means for cost-containment revealed the biggest change: roughly a third of firms reported they use lump sums for this reason.

Similar to previous years, large firms rely on cost-containment overall far more than smaller firms. Large firms remain far more likely than mid-size or small firms to use reviewing/renegotiating supplier contracts (37% vs. 24% and 20%) and pre-decision counseling (28% vs. 15% and 9%). Additionally, large firms remain much more likely than small firms to modify COLA-offering policy (19% vs. 9%) similar to 2015 (24% vs. 7%).

Question 21-1

Cost containment measures that could have been used in relocation policy/practice in 2016

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Question 21-2

Cost containment measures in relocation policy/practice used in 2016

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Alternative Assignments

Over the last three years, the majority of firms have come to rely on arrangements other than traditional relocations. Roughly two-thirds of firms indicate they use alternative assignments (67%) similar to the past two years (64%-65%) and far more often than the previous three years. The percentage of large firms using such arrangements is at the highest level measured (74%) on par with 2015-2016 (72%-73%) after progressively increasing from 2012 through 2014 (60%, 62%, and 66%). Usage among mid-size firms remains nearly twice that of 2014 (70% vs. 37%) and similar to 2015 (75%) and 2016 (68%). Usage among small firms also reaches a historical high (59%), continuing to grow after progressively increasing from 2015 to 2016 (48% to 54%), and is now nearly three times that reported in 2014 (19%).

The mobility policy methods for alternative assignments vary widely. In the past, the overwhelming policy driver was accomplishing strategic business goals. Now, most methods show similar usage levels overall. However, while nearly every potential policy method is used by roughly a third or more of firms across company size, there are a few differences. Far more small and mid-size firms use alternative assignments in place of long-term assignments compared to large firms (47% vs. 30%), while large firms are more likely to use these assignments to meet strategic business goals (50% vs. 31% and 28%). These unique arrangements were birthed as a solution to meet the strategic business needs for staff to move geographically while not bearing the full costs of traditional relocations. They appear to continue to be used to meet company needs and objectives depending on the needs presented.

Overall, the top four factors used to determine whether alternative assignment options are brought into play are: business need (61%), cost (52%), assignment purposes (51%), and job function (46%). However, the weight of these factors varies widely by company size this year, while remaining fairly normalized overall compared to the past few years. Among large firms, business need (75%) far outstrips other factors, although cost (51%) and assignment purpose (49%) are second-place considerations. The top four factors are far more equal in consideration at small and mid-size firms; job function carries far more weight at these firms than at large firms (57% and 46% vs. 34%).